Bond Market Signals End of Easy Gains Amid Rising Yields

Financial market outlets describe the bond selloff as a reset after years of near-zero interest rates and heavy central bank support. They link rising yields to sticky inflation, larger fiscal deficits, and expectations that central banks will not quickly return to ultra-low rates. They warn that investors who relied on a "free lunch" of low borrowing costs and rising asset prices now face more volatility and the need to be more selective.

• •US and European government bond yields are rising as investors demand higher compensation for inflation and fiscal risk.
• •The AT1 bond market is so strong that banks can fix funding costs for a decade despite higher global yields.
• •The recent bond selloff reflects more than inflation data, including concerns over large government borrowing needs.
• •Investors who stretched for yield during the low-rate era are now exposed to sharp price losses on long-duration bonds.
• •Market strategists are advising shifts into shorter maturities and selective credit rather than broad passive exposure.